TL;DR
- The Bitcoin network shows clear signs of miner capitulation, suggesting a possible inflection point in the BTC market.
- The BTC hash rate has fallen 7.7% following the halving, the largest decrease since December 2022.
- Miners are facing significant financial pressure due to low prices, reduced block rewards, and falling transaction fees, forcing them to sell their reserves.
According to a recent report from CryptoQuant, the Bitcoin network shows clear signs of miner capitulation. This phenomenon has historically preceded price bottoms, suggesting that the BTC market may be approaching an inflection point.
Miner capitulation occurs when some miners are forced to halt operations or liquidate part of their BTC reserves due to unsustainable financial pressures. Currently, these signs have become evident with the notable decrease in the Bitcoin network’s hash rate, which has fallen 7.7% following the halving. This is the largest decrease since December 2022, a period marked by the collapse of the FTX exchange and a BTC cycle bottom.
The CryptoQuant report shows that Bitcoin miners are under considerable financial pressure. This situation results from a combination of factors, including lower BTC prices, reduced block rewards post-halving, and a decline in transaction fees. Consequently, miners are being extremely underpaid, forcing them to consider shutting down operations or selling their BTC holdings to cover costs.
Bitcoin Reserves Reach Historic Low
Miners’ reserves have reached their lowest level in over 14 years, standing at 1.90 million BTC as of June 19, 2024. Additionally, daily BTC outflows have increased to levels not seen since May of this year, with miners selling their reserves at an accelerated pace.
Some large mining companies have begun using their reserves to earn yields or hedge against exposure. The average revenue per hash, or hashprice, remains near historic lows, pushing them towards capitulation.
With miner capitulation signaling a possible price bottom, the coming months will be crucial to observe how these dynamics develop and what impact they will have on the crypto market in general.
